The Philippine Seafood Sector: A Value Chain Analysis

Within the Asian region CBI is currently studying the possibilities of developing in-tegrated programmes for the seafood sector for specific countries. This follows up on CBIs current sea-food activities in Indonesia with the Ministry of Marine Affairs and Fisheries (MMAF) and the Surabaya Seafood Centre.

Based on the results of the desk study which was carried out in phase one of this seafood export VCA, the following subsectors in the Philippines were selected for value chain analysis:

• Shrimp
• Tuna
• Seaweed

Shrimp Subsector

The Philippines used to be one of the prime movers in the Asian shrimp industry. At present this is no longer the case. Production of Black Tiger shrimp was only 10,000 tonnes in 2010 due to disease out-breaks and crop failures, which resulted from lack of quality seeds and bad farm management practices. The production of Pacific White shrimp is currently limited to the domestic market that is estimated to be around 4,500 tonnes a year. Three main bottlenecks for the export potential of the Philippine shrimp sub-sector have been identified as a result of the desk study, field work and validation workshop. These are presented in Table 1.

Shrimp exports are confronted with significant problems from the domestic supply chain as well as from the international market. Participants during the conference expressed their hope that if more companies get EU certified, the sector would receive a boost. However, this is not at all certain, as many export companies who previously were EU certified have not renewed their EU approval because the costs were higher than the expected benefits. The companies that are trying to get approved now face difficulties with complying with the BFAR procedures. Despite the current crisis, there is great potential in the Philippines for shrimp farming. Conference participants underlined that EU buyers often are not aware that shrimp is produced in the Philippines. The two companies that are EU certified both found customers in the EU and export Black Tiger shrimp. These two companies are the largest shrimp exporters in the country. If other smaller or medium-sized companies get EU approval they will need additional support to get market infor-mation and to make themselves visible in the EU market.

Tuna Subsector

In 2010 almost 500,000 tonnes of tuna were caught in the Philippines. This catch consisted of different species, of which Skipjack and Yellow fin tuna were the most important ones, amounting to nearly 180,000 and 85,000 tonnes respectively. Tuna from the Philippines were exported as fresh, frozen and canned products. According to BFAR statistics in the period 2000-2010 the export of canned tuna in-creased while the export of frozen tuna (various product types) fluctuated. While the export value of canned tuna in 2000 was USD64M, in 2010 the export value increased significantly to USD242M. Six main bottlenecks for the export potential of the Philippine tuna subsector were identified as a result of the desk study, field work and validation workshop. These are presented in Table 2.

The bottlenecks quality and safety issues and producer competency occur at the level of the fishing fleet, fish landing sites and also the middlemen. Although large investments are needed (both on vessels and on the landing sites)to improve quality and safety issues of handling tuna after catch, better training and inspection can also contribute to removing this bottleneck or at least to improving the quality of the landed fish. The dwindling stocks and data gaps mainly occur on the level of the fishing fleet. Fluctuations and declining tuna stocks are difficult to tackle since tuna is a highly migratory species. Although some data gaps can be solved, the most essential data gaps, such as monitoring tuna stocks, would require long term planning.

Most of the bottlenecks that have been discussed demonstrate that there seem to be clear differences between the value chain of frozen tuna and canned tuna. Canning companies are large companies that are already certified to export to Europe. Although most of the bottlenecks that have been discussed apply to the Philippine sector in general, they primarily occur in the value chain of frozen tuna. Most of the fishermen and processing companies are small or medium-sized. These small and medium-sized processors have to deal with middlemen and have to rely on the fluctuating catch of small fishers who often lack the facilities to store the tuna after catching. Furthermore, the share of frozen tuna that is exported to the EU is small since most of the frozen tuna products are exported to Japan. Small and medium-sized exporters are hesitant to export to the EU because of the high standards and the fact that export prices for frozen tuna for Japan often are higher than for the EU.

Seaweed Subsector

More than 70% of total seaweed production comes from Mindanao, in the southern part of the country. In addition to the local production, the Philippines also imports Raw Dried Seaweed (RDS) to fulfil the demand from local carrageenan processing companies. The combined volume of RDS from local production and imports was more than 90,000 tonnes in 2010. Four main bottlenecks for the export potential of the Philippine seaweed subsector have been identified as a result of the desk study, field work and validation workshop. These are presented in Table 3.

The Philippine seaweed sector is strong and offers employment to lots of coastal communities and also contributes to foreign trade. The Philippine carrageenan processing industry is the second strongest in Asia after China. However, it is under threat of competition from China and, increasingly, Indonesia. In order to survive, it is crucial for the sector to increase domestic production and productivity. Improved productivity could reduce production costs and make the product more competitive. It is clear that to achieve this, the government and private sector need to invest both capital and knowledge in the seaweed farming sector. Also, the sector should organise itself better and overcome disputes about competition that hamper cooperation between companies and suppliers.

Although it is often argued that carrageenan exporters should be able to survive on their own because they are full grown businesses which are often in the hands of multinational companies, there is also a group of local business which are struggling to survive. Some of these have already left the sector and others look for inventive strategies and product development to maintain their position. This group of companies is in need of support to increase their visibility in the international market and to get market intelligence about opportunities for marketing innovative products such as organic seaweed fertiliser. The issue here is that the products produced by these companies are not suitable for seafood trade fairs. Therefore it is doubtful whether the seaweed sector fits in the seafood programme. The Philippine government has made the same conclusion by placing the carrageenan exporters under the authority of DTI instead of BFAR.

Further Reading You can view the full report by clicking here.

January 2013